Starting a seasonal business

A woman buys an icecream from a seasonal business

Just because your products aren't in demand all year round and customers won't buy your products or services throughout the year, doesn't necessarily mean your business idea isn't viable

Sometimes ideas have seasonal appeal. If you're lucky, you might be able to generate enough profit not to have to worry too much about income for the rest of the year. Alternatively, you might run your business for, say, six or eight months and run another seasonal business for the rest of the year.

Many of the challenges seasonal businesses face are the same as any other business. However, some are unique. So what are the golden rules of starting and running a seasonal business?

1. Know your market

You must be sure there's enough demand for your products or services that you can generate sufficient income during your peak season. If you lack knowledge, carry out some simple market research. Ask potential customers whether they would buy from you at the prices you're thinking of charging. If so, what would they buy, how much would they buy and when? Find out also what competition you face and try to set yourself apart. Markets change, so your knowledge must remain current.

2. Let people know you exist

Seasonal businesses must often work harder to promote themselves, often simply to remind customers they're there. To hit the ground running, you've got to leave enough time for your publicity and advertising to attract punters. When it comes to marketing, proper planning prevents poor performance, so create a plan. You must also commit enough time and money to marketing and use all channels that could bring you sales.

3. Don't run out of cash

Cash is king. Successfully managing cash flow can present a significant challenge for seasonal businesses because they receive most of their income in a set period, but may have outgoings at other times. The temptation can be to spend too much when cash is plentiful, creating cash flow issues when revenue is down. Such irregular cash flow requires careful planning and management.

4. Only buy what you need

Being left with unsold stock will cost you dearly. You must accurately estimate demand by using your market knowledge/research. Spend every pound as if it were your last. Getting favourable terms from suppliers can be a "big ask" when buying within a limited period, but there's no harm in asking. Shop around for best value and try to establish good relationships with suppliers.Just in time inventory management can help you minimise wastage by allowing you to order stock and supplies as you need them.

5. Employ enough of the right people

If you need a helping hand, make sure you have enough bodies when you need them. Failure to do so will lose you sales. Temporary or fixed-term employees provide a cost-effective solution, but always leave yourself enough time to recruit the right people.

6. Make sure you're legal

Ignorance won't stand up as a defence in court - nor will being a seasonal business. Some businesses require a licence to trade or must be registered, of course, while all business have legal responsibilities when it comes to health and safety, insurance and employment. If you lack sufficient legal knowledge, seek professional advice.

7. Seek reliable tax advice

Much will depend upon the legal structure of your business, its turnover and your total personal income, but seek professional advice to ensure maximum tax-efficiency. You might need to become VAT registered if your turnover reaches the VAT threshold. It might be wiser to form a company ("incorporate") rather than operate as a sole trader . You need to make sure you claim all available allowances and reliefs, too. You might need an accountant to help you with your returns.

8. Last longer by diversifying

If offering discounts and holding promotions doesn't help you to make sales when sales slowdown, maybe you could modify your offer to give it wider (and therefore more long-lasting) appeal. The changes might only need to be subtle and therefore inexpensive. Targeting other customers might boost your turnover. Perhaps you might be able to sell your products online.

9. Use quiet times to improve your offer

If you cannot change your products or services to give them longer-lasting appeal, make sure you "mothball" your seasonal business properly. Use quiet periods to think of ways you can improve the business for when it becomes active again. You might want to introduce new products or services or operate in a new location, for example. Also try to devise ways to market your seasonal business more effectively.

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